Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Wagg v Farthing [2015] NSWCATAP 217 Hearing dates: 20 May 2015 Date of orders: 06 October 2015 Decision date: 06 October 2015 Jurisdiction: Appeal Panel Before: O Shub, Principal Member K Rosser, Senior Member Decision: 1. Leave to appeal is refused 2. The appeal is otherwise dismissed. 3. Any application for costs of the appeal is to be filed and served within 14 days of the date of publication of these orders and is to be accompanied by a submission not exceeding three pages in length. 4. Any submission in response to an application for costs is to be filed and served within 14 days of the date of service of the application and is also not to exceed three pages in length. Catchwords: Appeal, Error of Law, Substantial Miscarriage of Justice, Against Weight of Evidence, Cost Plus Contract, Termination of Contract, Expert Evidence, Guillotine Order Legislation Cited: Civil and Administrative Tribunal Act 2013 Home Building Act 1989Civil and Administrative Tribunal Rules 2014 Cases Cited: Boral Bricks Pty Ltd v Cosmidis; Boral Bricks Pty Ltd and BP Wiskich Pty Ltd [2013] NSW CA 443 Chappel v Hart (1998) 195 CLR 232 Collins v Urban [2014] NSWCATAP 17 Hodder Rook and Associates Pty Ltd v Genworth Financial Mortgage Insurance Pty Ltd [2011] NSWCA 279 Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) CLR 115 Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 North Sydney Leagues Club Limited v Synergy Protection Agency Pty Limited. [2012] NSWCA 168 Texts Cited: Nil Category: Principal judgment Parties: Andrew Wagg and Marie Hackett, Appellants Dean Farthing, Respondent Representation: Counsel: B Pluznyk (Appellants) P Bambagiotti (Respondent) Solicitors: GRG Lawyers (Appellants) HWL Ebsworths (Respondent) File Number(s): AP 15/09247 Publication restriction: Nil Decision under appeal Court or tribunal: Consumer and Commercial Division Jurisdiction: Consumer and Commercial Division Date of Decision: 22 January 2015 Before: N Correy, Senior Member File Number(s): HB 11/43514 HB 11/62299 REASONS FOR DECISION Introduction 1. Andrew Wagg and Marie Hackett (the Appellants) have appealed against a decision of the Consumer and Commercial Division of this Tribunal made on 22 January 2015 in matters HB 11/43514 and HB 11/62299. The Tribunal published one set of reasons for decision and orders determining both applications. 2. The Appellants assert that the Tribunal made errors of law. They also seek leave to appeal on the ground that they may have suffered a substantial miscarriage of justice, arguing that the decision of the Tribunal is against the weight of the evidence and was not fair and equitable. 3. We have decided to dismiss the appeal because the matters the Appellants complain of are not errors of law and because we do not consider that the decision was unfair and inequitable or against the weight of the evidence. We refuse leave to appeal in any event. Our reasons for reaching those conclusions follow. Background 1. On 16 August 2010, the parties entered into a cost plus contract pursuant to which the Respondent agreed to build a dual occupancy dwelling for the Appellants on a nine acre parcel of land. 2. The Respondent commenced construction of the dwelling, during the course of which disputes arose between the Appellant and the Respondent as to the speed of the work being carried out by the Respondent and the costs being incurred, which were alleged to be significantly in excess of the budget provided to them. 3. The estimated cost of the works given to the Appellants by the Respondent upon execution of the contract was $420,000.00 with the Respondent entitled to a 10% fee on costs payable exclusive of GST and to be paid $53.00 per hour plus GST for his own work. On 17 August 2010, the Appellants sent the Respondent a base budget forecast for the works in the sum of $519,402.00. 4. The contract required the builder to provide a budget report on the fifth day of each calendar month. The Appellant alleged that the Respondent did not provide a budget report for October, November or December of 2010. 5. Against a background of a deteriorating relationship between the parties, on 17 February 2011 the Appellants, through their solicitors, wrote to the Respondent, alleging breach of contract by; 1. Failing to provide supporting documentation for payment claims; 2. Failing to provide documentation for the payment claim of a $24,000.00 deposit; and 3. Seeking to recover a deposit when there was no provision for a deposit in the contract. 1. On 13 April 2011, the Appellants purported to terminate the contract on the grounds that the Respondent; 1. Breached clause 17C and 17D – form of payment claim and supporting documentation; 2. Breached clause 18D – not including proper GST and progress claims; 3. Breached clause 26A(ii) – proceeding with works with due diligence or in a competent manner and 26A(iii) – wrongfully suspending work; 4. Breached schedule 1 part BA in respect of the calculation of fees. 1. In response, the Respondent, sought damages for wrongful termination, and claimed inter alia a lost margin of $19,805.37. On a margin of 10% the Respondent, by implication, valued the cost to complete the works at $198,053.70. The total cost of the works as at 13 April 2011, eight months after the contract was signed, was estimated on the Respondent's calculation to be $564,149.33. 2. The Respondent subsequently commenced proceedings claiming an unpaid invoice of $2,310.49 and damages for wrongful termination of $59,302.12: matter HB 11/43514. 3. The Appellants commenced proceedings for damages for defective work and increased costs arising from the location of the house totalling $88,680.16 and sought a refund of overpayments made bringing the claim to $113,729.32 in total: matter HB 11/62299. 4. The proceedings were commenced in the Consumer, Trader and Tenancy Tribunal (CTTT) and were ultimately determined by the Consumer and Commercial Division of the Civil and Administrative Tribunal pursuant to transitional provisions in the Civil and Administrative Tribunal Act 2013 (the NCAT Act). Both matters came before the Tribunal on a number of occasions for directions. Time was extended on several occasions for the Appellants to file and serve evidence in respect of their application, with a guillotine order finally being made on 1 June 2012. The Tribunal's reasons for decision describe this process as follows: 6. Both matters were before the Tribunal for directions on 23 January 2012 when the time for the homeowners to file and serve their evidence was extended to 7 February 2012 in the builder's application and 20 February 2012 in their own application respectively ….. The matters were next before the Tribunal for directions on 16 April 2012 and orders made include the following: 2. The time for the applicant (homeowners) in proceedings HB 11/62299 to file and serve its evidence be extended to 7 May 2012. In the event of default, the Tribunal notes that on the next occasion the Tribunal may entertain an order to prevent reliance on evidence served after that date…. 7. On 1 June 2012 the matters came on for direction again and the following relevant orders were included in the Tribunal's directions: 2. By consent the time for the homeowners in proceedings HB 11/62229 to file and serve their expert evidence is extended to 13 June 2012. 3. Without leave of the Tribunal any evidence served by the homeowners after 13 June 2012 is inadmissible and cannot relied on by the homeowners. 4. The homeowners are to pay the builder's costs of and incidental to today as agreed or assessed. 8. At a directions hearing on 7 September 2012 an application for leave to file and serve an expert report of Helen Bousamra was granted over objection from the builder. 1. The matters were listed for a three day hearing commencing on 13 May 2013. A fourth day of hearing was listed on 2 July 2013 and the matters came back before the Tribunal on 1 September 2014. Tribunal's decision 1. In determining the applications, the Tribunal relevantly found that: 1. It was not credible that the Appellants had reason to believe that the likely cost of the project was $420,000.00. 2. The evidence relating to where the dwelling should have been constructed on the site having regard to the survey plan was not consistent with the Appellants' claim that it should have been constructed near the gate. 3. The site layout plan referenced in the contract which was prepared by the Respondent is largely consistent with the survey plan, even though the orientation of the dwelling is slightly changed. 4. The pegging out is consistent with the location of the constructed dwelling and was undertaken prior to the Respondent's involvement and on direct instruction from the Appellants. 5. The Appellants did not have a right to terminate the contract under Clause 26(a)(ii), as contract administration did not form part of the "works" to be performed with "due diligence and in a competent manner" under the contract. 6. The Appellants did not have a common law right to unilaterally terminate the contract, as the Respondent did not breach an essential term of the contract or breach an inessential term in a manner that would deprive the Appellants of the real benefit of their bargain. 7. The Appellants' purported termination of the contract was wrongful and it was open to the Respondent to accept the purported termination as repudiation of the contract. 8. On that basis the Respondent was entitled to damages to compensate him for the losses suffered as a consequence of the Appellant's repudiation. 9. The Respondent was entitled to compensation for loss of income for ten weeks, less 15% in respect of a saving on overheads. 10. The Respondent's claim in respect of loss of margin should not be reduced on the basis of claimed overcharging for three labourers, on the basis that the Respondent's submission that the relevant labourers were common law employees was accepted. 11. On the same basis, the Appellants were not entitled to reimbursement for the profit charged on three labourers. 12. The Appellants were not entitled to compensation for increased driveway costs. The dwelling was constructed in accordance with the drawings attached to the contract which were approved by the local council. Given Mr Wagg's corporate background, it would have been well within his knowledge that the cost of a fifty metre driveway would be considerably more than that of a twenty metre driveway without the Respondent having to advise him of it. 13. The Appellants were entitled to damages in respect of defective work in the sum of $1,125.00. 1. A significant issue in the conduct of the proceedings before the Tribunal was the Tribunal's rejection of the Appellants' expert report and the refusal of the Tribunal to admit further evidence the Appellants sought to file on the fourth day of the hearing. 2. With one small exception relating to specific claimed defects, the Tribunal rejected the expert reports filed by the Appellants in their proceedings following an objection by the Respondent's legal representative. This was on the basis that the reports did not comply with the Chairperson's Directions on the Code of Conduct for Expert Witnesses (the Code of Conduct), which applied in the CTTT at the time of the hearing. At the Appeal Hearing, it was not in dispute that the objection was made at the time the reports were tendered. The Tribunal's reasons for decision indicate that this was on the third day of hearing, which was 15 May 2013. 3. As noted above, the fourth day of hearing occurred on 2 July 2013. Prior to that date, the Appellants obtained and served a further report from one of their experts and a statement from a Mr Terry. The Respondent obtained a report from a Mr Pyke. Applications made at the hearing to rely on this evidence were refused on the basis that the evidence was not compliant with earlier orders made by the Tribunal. (In relation to these orders, see [13] above). 4. Relevantly, the Tribunal ordered: 1. In matter HB11/43514 that the Appellants pay to the Respondent the sum of $41,148.01 in damages for breach of contract; 2. In matter HB11/62299 that the Respondent pay to the Appellants the sum of $1,125.00 in respect of the costs of rectification of defective work; 3. That the Appellants pay to the Respondent the difference in the amounts payable in paragraphs 1 and 2 above being an amount of $40,023.01 within 28 days of the order; Jurisdiction 1. Section 80(1) of the NCAT Act provides that an appeal against an internally appealable decision may be made to an Appeal Panel. An internally appealable decision is defined in s 32 of the Act to include a general decision made by the Tribunal. A general decision is defined in s 29 of the Act as a decision made in the exercise of the Tribunal's general jurisdiction which is, in turn, ascertained by reference to legislation other than the Act. In this case, the Tribunal's jurisdiction was enlivened by s 48K of the Home Building Act 1989. The Tribunal therefore had general jurisdiction in relation to the applications and the Appeal Panel has jurisdiction in relation to the internally appealable decision. 2. An appeal from an internally appealable decision lies as of right on any question of law or, with the leave of the Appeal Panel, on any other ground: 80(2) of the NCAT Act. The question of leave is restricted in the case of an appeal from the Consumer and Commercial Division, by clause 12 of Schedule 4 of the NCAT Act to the following grounds: (a) the decision of the Tribunal under appeal was not fair and equitable, or (b) the decision of the Tribunal under appeal was against the weight of evidence, or (c) significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with). 1. The meaning of "substantial miscarriage of justice" was summarised by the Appeal Panel in its decision in Collins v Urban [2014] NSWCATAP 17 (Collins v Urban) as follows at [71] and [79]: [71]. . . [I]t can be seen that the concept of a substantial miscarriage of justice refers to a failure in the way a matter was conducted or decided which deprived the appellant of a chance that was fairly open of achieving a better outcome than occurred. . . . [79] In order to show that a party has been deprived of a "significant possibility" or a "chance which was fairly open" of achieving a different and more favourable result . . . it will be generally be necessary for the party to explain what its case would have been and show that it was fairly arguable. If the party fails to do this, even if there has been a denial of procedural fairness, the Appeal Panel may conclude that it is not satisfied that any substantial miscarriage of justice may have occurred. 1. The principles to be applied by an Appeal Panel when considering whether to grant leave to appeal was also considered in Collins v Urban. In that matter, the Appeal Panel conducted a review of relevant cases at [65] to[79] and concluded at [84]: 84. The general principles derived from these cases can be summarised as follows: (1) In order to be granted leave to appeal, the applicant must demonstrate something more than that the primary decision maker was arguably wrong in the conclusion arrived at or that there was a bona fide challenge to an issue of fact: BHP Billiton Ltd v Dunning [2013] NSWCA 421 at [19] and the authorities cited there, Nakad v Commissioner of Police, NSW Police Force [2014] NSWCATAP 10 at [45]; (2) Ordinarily it is appropriate to grant leave to appeal only in matters that involve: (a) issues of principle; (b) questions of public importance or matters of administration or policy which might have general application; or (c) an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; (d) a factual error that was unreasonably arrived at and clearly mistaken; or (e) the Tribunal having gone about the fact finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed. Notice of Appeal 1. The Notice of Appeal in this matter was filed on 20 February 2015, which is within the time period specified in Rule 25(4)(c) of the Civil and Administrative Tribunal Rules 2014. An amended Notice of Appeal was filed on 27 April 2015. 2. The Appellants submit that the Tribunal erred on a question of law on the following grounds: 1. By denying the Appellants procedural fairness by not admitting into evidence expert reports of Mr Maglis dated 25 June 2013 (apart from items 16 and 17, the Scott Schedule) and a statement of Mr Terry dated 28 June 2013 (the expert evidence issue); 2. By not finding that there was a term in the design agreement that the Respondent would make recommendations as to the location of the dwelling, its cost and associated costs, and to provide alternate costing if the dwelling was located elsewhere so that the Appellants could make an informed decision (the design issue); 3. By finding that the Respondent owed no duty of care to the Appellants when engaged in the design work to warn of increased costs if the dwelling was located further from the front gate (the design issue); 4. By finding that breaches by the Respondent (not providing updated monthly estimates, not providing substantiation of all expenses, underestimating substantially the cost of construction, constructing the dwelling not in accordance with the plan, and defective work) did not entitle the Appellants to terminate the contract, and awarding the Respondent damages for wrongful termination (the termination issue); 5. By awarding the Respondent damages for lost income after deducting 15% for expenses when there was no evidence that expenses were 15% (the calculation of damages issue); 6. By not adjusting the Respondent's claim downwards by $9,228.46 due to overcharging for labour hire (the calculation of damages issue); 7. By not adjusting the Respondent's claim downwards by $15,820.70 due to overcharging on general costs and expenses (the calculation of damages issue); 8. By doubling up of damages by allowing loss of profits of $2,850.34 to be added to the Respondent's margin of $19,805.37, when the loss of profits should have been included in the Respondent's margin (the calculation of damages issue); and 9. By not deducting expenses from the Respondent's margin (the calculation of damages issue). 1. In the alternative, the Appellants sought leave to appeal on any ground not found to be appealable on a question of law on the basis that the Appellants suffered a substantial miscarriage of justice because the decision was not fair and equitable and against the weight of the evidence. Appellants' Submissions on the Appeal 1. The Appellants relied on a written submission filed by Mr Pluznyk dated 24 April 2015 and supplemented with oral submissions presented to the Appeal Tribunal. The submissions are dealt with below. 2. The Appellants divided the submissions into various categories as follows; 1. The expert evidence issue; 2. The design issue; 3. The termination issue and 4. The calculation of builder's damages issue. 1. The Appeal Panel will deal with each of those issues under the same headings. The grounds of appeal as set out in [25] above have been categorised accordingly. Reply to Appeal 1. In the Reply to Appeal, dated 11 May 2015 the Respondent submitted that there was a difficulty in distilling the Notice of Appeal in that "there are open issues as to what are questions of law and what are questions of fact" and queried whether the appeal is against what were essentially interlocutory decisions which tries to turn errors of fact into errors of law. Respondent's Submissions on the Appeal 1. The Respondent relied on a written submission dated 11 May 2015, which was annexed to the Reply to Appeal. Determination of the issues The expert evidence issue 1. This issue arises from the successful objection to expert evidence sought to be tendered by the Appellants on the third day of hearing before the Tribunal below. 2. Mr Pluznyk submitted to the Appeal Panel that in response to the first report filed by the Appellants with its attached Scott Schedule, the Respondent filed an affidavit. (This affidavit is dated 16th of October 2012 and appears in the Respondent's bundle at tab 9). It was submitted that the Respondent did not complete the Scott Schedule as would normally be done. Further, there had been no conclave and in his affidavit the Respondent had addressed issues of liability only and made no comment in respect to quantum. 3. The Appellants submitted that they should have been able to rely on the Respondent's affidavit and that the quantum should have been an admitted item. 4. The Appellants referred to the case of Hodder Rook and Associates Pty Ltd v Genworth Financial Mortgage Insurance Pty Ltd 2011 NSWCA 2729, and, in particular, the following statement: The rules of the court are to be the servant of justice, not its master. No matter how inconvenient it may be, a judge must never lose sight of his or her primary duty and that is to ensure a fair trial. 1. In addition, the Appellants referred the Tribunal to the following: It is no longer open for a party at the first day of the hearing to take a technical objection to the opponent's evidence. If an objection is taken, the trial judge should normally disallow it, or make such order as is appropriate for there to be a fair trial. Finally, there was not a fair trial in the present case. There were not the materials before the court for proper adjudication. 1. The Appellants also referred the Tribunal to Boral Bricks Pty Ltd v Cosmidis; Boral Bricks Pty Ltd v DM and BP Wiskich Pty Limited 2013 NSW CA 443 which stated: Generally speaking however, forewarning of objection should be given, particularly in circumstances where if the objection were meritorious, there might be an opportunity to rectify the deficiency prior to trial so that a valid objection does not cause the objector to suffer from further evidence being called at trial, of which the objector has no warning. At least in some cases the failure to give timely warning on valid objections to an expert report may form the basis of a successful adjournment application at the expense of the objector. 1. In essence, the Appellants submitted that by not disputing the quantum and only disputing the liability, the quantum should have been agreed and the only issue should have been the determination of liability. 2. The Appellants characterised this appeal ground as a question of law being a denial of procedural fairness. 3. At the hearing before the Appeal Panel, the Appellants did not argue that the Tribunal erred in finding that the relevant reports as originally prepared did not comply with the Code of Conduct for Expert Witnesses and in not admitting them. Rather, the Appellants' case as argued at the hearing was that they were denied procedural fairness because the Tribunal rejected the new evidence obtained by the Appellants between days three and four of the hearing, which they sought to tender on the fourth day. 4. In support of this ground of appeal, the Appellants argued that the decision of the Court of Appeal in Hodder Rook & Associates Pty Ltd v Genworth Financial Mortgage Insurance Pty Ltd [2011] NSWCA 279 (Hodder Rook) means that the Respondent should have notified them that they were going to object to their original reports prior to the commencement of the hearing. A denial of procedural fairness, if established, is a question of law for which no leave is required. 5. We are not satisfied that there was a denial of procedural fairness for the following reasons. 6. First, as the procedural history set out in [13] to [14] above demonstrates, the Appellants were given multiple opportunities to file and serve expert evidence that complied with the Code of Conduct. Ultimately, the orders for extensions of time given to the Appellants to provide their evidence included – appropriately in our view - the making of a guillotine order on 1 June 2012. 7. Second, no leave was sought or given to the Appellants to file further evidence after their original evidence was rejected. On the basis of the Tribunal's reasons for decision, we are satisfied that on the third day of the hearing it was made plain to the parties that the time for filing evidence had closed: see [9] of the reasons for decision. At no time prior to seeking to tender the new evidence on the fourth day of hearing did the Appellants seek leave to adduce additional expert evidence. 8. Third, the facts of this matter can be distinguished from those in Hodder Rook. In that matter the non-compliance with the relevant rules regarding expert evidence was a technical non-compliance that had been addressed by the time the matter came on for hearing. In this case, the Appellants were at all times legally represented. They can be taken to have been on notice that in order to be successful in a claim in respect of defective work, they would require expert evidence and that that evidence would need to comply with the relevant standard for such evidence. 9. Fourth, the Tribunal had not ordered the parties to disclose possible objections to evidence in advance. The Appeal Panel is satisfied that it was appropriate for the Respondent to raise its objection to the Applicants' evidence at the time it was tendered. 10. In all the circumstances the Appeal Panel finds that there was no denial of procedural fairness on the part of the Tribunal below in respect of the manner in which it dealt with the Appellants' expert evidence. Nor is the Appeal Panel satisfied that the Tribunal's decision in relation to the Appellants' expert evidence was not fair or equitable. Once the Appellants' expert evidence on liability had been properly excluded, it mattered not that the Respondent had not filed any evidence on quantum. We accordingly reject this ground of appeal. Design issue 1. There are two aspects to this issue. First, the Appellants argue that the Tribunal erred in not finding that the agreement between the parties required the Respondent to make recommendations as to the location of the dwelling, its cost and associated costs, and to provide alternate costing if the dwelling was located elsewhere (that is, closer to the gate) so that the Appellants could make an informed decision. Second, the Appellants argue that the Tribunal erred in finding that the Respondent owed no duty of care to the Appellants when engaged in the design work to warn of increased costs if the dwelling was located further from the front gate. 2. We are not satisfied that there was any error or any unfairness in the Tribunal's decision arising from this issue. In relation to the first aspect of the issue, the Appellants did not put to the Tribunal that there was an implied term of the nature argued for by the Appellants on the Appeal. The Tribunal did not err in not making a finding in relation to an argument that was not put to it. 3. In relation to the second aspect of the issue, the Appellants had relied on the decision in Chappel v Hart (1998) 195 CLR 232. In that case, the High Court upheld a decision that a surgeon was liable for failing to warn a patient of a previously unreported complication of a procedure, which occurred in her case. Had she been properly warned, the patient would have had the procedure at another time, probably with a more experienced surgeon. The Tribunal distinguished the facts in this matter from that decision, finding that Mr Wagg's corporate background meant that he did not need to be warned by the builder that the cost of a fifty metre driveway would be considerably more than a twenty five metre driveway, as this was "simply common sense and should have been well within his knowledge". 4. The Tribunal had already found that the Appellants' evidence that the dwelling should have been constructed closer to the gate is not consistent with the survey plan which was obtained by the Appellants before the Respondent was formally retained. The Tribunal noted that the site layout plan referenced in the contract prepared by the builder is largely consistent with the survey plan although the orientation of the house was slightly changed. The Tribunal further noted that the pegging out had occurred prior to the Respondent's involvement, on direct instruction from the Appellants, and is consistent with the location of the constructed dwelling. There is no basis for disturbing the Tribunal's findings concerning the location of the dwelling, or the manner in which the Tribunal distinguished the present case from Chappel v Hart. In these circumstances, the appeal ground in respect of the design issue is not upheld. Termination issue 1. The Appellants do not argue that they had a contractual basis for terminating the contract. Rather, it was submitted that the Appellants had a right to terminate under the common law. This argument was put to the Tribunal below and rejected. Mr Pluznyk submitted the Tribunal erred in rejecting the arguments. He submitted that the Appellants were entitled to terminate the contract at common law because the Respondent repudiated the contract by: 1. Not building the house in accordance with the plans; 2. Not providing budgets; 3. Not providing all supporting documentation for work charged; 4. Overcharging and not applying the GST provisions correctly. 1. The Appellants submitted that there was a series of disputes between the Appellants and the Respondent which led to a total breakdown of trust between them and, it was submitted, that there must be a situation of trust in a cost plus contract. It is not equivalent to a fixed price contract where the element of trust is not essential as the client has a fixed price for the work to be done. It cannot be said that the owners are required to be onsite all the time to check and ensure that what the builder is charging them for is in fact being done. It was therefore submitted that because of the breakdown in trust the Appellants were entitled to terminate the contract at common law, in accordance with principles enunciated in Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) CLR 115. 2. The Appeal Panel is not satisfied that the Tribunal erred in the way in which it dealt with this issue at [60]-[71]. It was open to the Tribunal below to find, as it did, that the builder did not breach an essential term of the contract or an inessential or intermediate term the breach of which deprived the Appellants of the benefit of their bargain. It was open to the Tribunal to find, on this basis, that the Appellants did not have a common law right to unilaterally terminate their contract with the Respondent. This ground of appeal accordingly fails. The Builder's Damages issue 1. There are a number of elements to this issue, each of which was articulated as a separate ground of appeal. As noted above, the Appellants claim that the Tribunal erred: 1. By awarding the Respondent damages for lost income after deducting 15% for overhead expenses when there was no evidence that expenses were 15%; 2. By not adjusting the Respondent's claim downwards by $9,228.46 due to overcharging for labour hire; 3. By not adjusting the Respondent's claim downwards by $15,820.70 due to overcharging on general costs and expenses; 4. By doubling up of damages by allowing loss of profits of $2,850.34 to be added to the Respondent's margin of $19,805.37, when the loss of profits should have been included in the Respondent's margin and 5. By not deducting expenses from the Respondent's margin. 1. In respect of the deduction of 15% for overhead expenses, the Appeal Panel accepts the Respondent's submission that in respect of a claim for expectation damages, there is no absolute principle that account must be taken of overhead expenses: North Sydney Leagues Club Limited v Synergy Protection Agency Pty Limited. [2012] NSWCA 168 at [46]. Accordingly, by reducing the damages to take into account a reduction in notional overhead expenses, the Tribunal made a decision in favour of the Appellants. We are not satisfied that the Tribunal's decision to take into account overhead expenses constitutes of itself an error of law. 2. We agree that there was no evidence before the Tribunal to the effect that the Respondent's overhead expenses amounted to 15%. We are satisfied that, having decided to make a deduction for overhead expenses, the Tribunal was entitled to form the view that 15% was reasonable. We are not satisfied that in doing so the Tribunal made an error of law or that it is a matter in relation to which we would grant leave to appeal in accordance with the principles articulated by the Appeal Panel in Collins v Urban. 3. In respect of the $9,228.46 for labour hire, the Appellants argue that the Respondent hired employees from a hire company, that the rates paid to the hire company were lower than the rates for employees listed in the contract and that there was therefore an error in allowing the Respondent the higher rates plus the builders margin. The Appellants submit that the Tribunal erred in allowing the higher cost of employees rather than the cost being incurred to the hire company. During the hearing it was conceded on behalf of the Appellant that this issue did not involve a question of law. It was submitted that the Tribunal's decision on this issue was not fair and equitable. 4. The Appeal Panel is satisfied that the Tribunal below did not err in finding that the relevant workers were common law employees and entitled to be charged out at the relevant classified rate agreed between the parties in the building contract. We consider that such a finding was open to the Tribunal on the evidence and does not give rise to a question of law. Further, we are not satisfied that the decision made by the Tribunal was not fair and equitable or against the weight of evidence. Even if that were so, consistent with the principles articulated in Collins v Urban, we would not grant leave to appeal on this ground. 5. In respect of the alleged overcharging on general costs and expenses, the Respondent submits that as a result of the evidence of Mr Garcia in the Tribunal below (an affidavit dated 18 October 2012), all but $35.00 of the Respondent's invoices were reconciled. In view of this evidence, we are not satisfied that the Tribunal erred in not adjusting the Respondent's claim downwards by $15,820.70. To the extent that there was a discrepancy of $35.00 remaining after the reconciliation was carried out, which arguably could have formed a basis for the Tribunal below to reduce the damages by that sum, we would not grant leave to appeal on this issue, consistent with the principles enunciated in Collins v Urban. 6. For the same reason, we would not grant leave to appeal in respect of the Tribunal's failure to deduct expenses from the margin and we are not satisfied that any question of law is raised in respect of this issue. Conclusion 1. In summary, we are not satisfied that the Appellants have established that the Tribunal made an error of law by denying them procedural fairness or otherwise. We are also not satisfied that the Appellants have established a basis for leave to appeal to be granted for any of the reasons set out in Cl 12 of Schedule 4 of the NCAT Act. 2. The issue of costs of the appeal was not raised in the submissions made by the parties. Directions have accordingly been made in respect of this issue. The parties are on notice that s 60 of the NCAT Act applies in respect of costs on an internal appeal: Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120. The parties are further on notice that subject to any submissions made by the parties in this regard, the Appeal Panel intends to determine any application for costs on the papers. 3. We therefore make the following orders: 1. Leave to appeal is refused. 2. The appeal is otherwise dismissed. 3. Any application for costs of the appeal is to be filed and served within 14 days of the date of publication of these orders and is to be accompanied by a submission not exceeding three pages in length. 4. Any submission in response to an application for costs is to be filed and served within 14 days of the date of service of the application and is also not to exceed three pages in length. ********** I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar Amendments 07 October 2015 - Coversheet - amendment to cases cited. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 07 October 2015